Summary
This 8-K filing from Digital Realty Trust (DLR) on July 28, 2015, reports on a significant settlement agreement reached on July 22, 2015, with its former Chief Executive Officer, Michael Foust. The settlement resolves litigation related to his employment and termination, with DLR agreeing to pay Mr. Foust $8.0 million and canceling 127,644 profits interest units. This resolves all outstanding claims between the parties. From an investor's perspective, this settlement brings closure to a potentially disruptive legal matter. The company had previously accrued a severance expense of approximately $12.7 million. With this settlement, DLR expects to reverse approximately $4.7 million of excess expense in the third quarter of 2015, positively impacting reported earnings. This action aims to remove uncertainty and allow management to focus on operational performance.
Key Highlights
- 1Digital Realty Trust (DLR) reached a Settlement Agreement with former CEO Michael Foust.
- 2The settlement date was July 22, 2015.
- 3DLR will pay Mr. Foust $8.0 million to resolve all employment and termination-related claims.
- 4127,644 profits interest units held by Mr. Foust were cancelled as part of the agreement.
- 5Litigation between Mr. Foust and the company will be dismissed with prejudice.
- 6DLR previously recorded an expense of approximately $12.7 million for Mr. Foust's severance.
- 7The company expects to reverse approximately $4.7 million of excess expense in Q3 2015.